Unlikely for short-term inflation to re-accelerate.
CPI y/y
Actual: 2.3%
Forecast: 2.4%
Previous: 2.4%
Rallies!
I believe it’s unlikely for short-term inflation to re-accelerate. The main reason is that people expect tariffs to be the factor pushing inflation up. Once this factor starts to ease, expectations will also decline. The inventory built up from early stocking will eventually have to be cleared—whether that can happen depends on whether consumer spending can be maintained at a certain level.
The latest U.S. Consumer Price Index (CPI) for April showed a monthly increase of 0.2% and an annual increase of 2.3%, slightly lower than March’s 2.4%. This is the smallest annual increase since February 2021. The main contributor to inflation this quarter continues to be housing costs, accounting for about half of the increase. In addition, car insurance premiums keep rising, indicating that inflationary pressure in the services sector still exists.
Core CPI rose by 0.2% month-on-month and 2.8% year-on-year, in line with expectations. Food and energy prices showed divergent trends, with a noticeable drop in food prices. Egg prices saw the largest single-month decline since 1984, falling 12.7%. Overall supermarket goods prices fell by 0.4%, the largest drop since September 2020.
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